Foreign companies in Russia

Main article: Russian economy

2024

1200 German companies continue to operate in Russia

1200 German companies continue to operate in Russia. This was announced in mid-October 2024 at the German Embassy in the Russian Federation.

The diplomatic mission told Izvestia that the business itself makes the decision to stay or leave the Russian market. His departure was mainly influenced by EU anti-Russian sanctions, while it is possible that some companies may return.

Before the start of Russia's special military operation in Ukraine in 2022, approximately 3.6 thousand German companies worked in the Russian Federation, and in 2011 - 6.3 thousand.

More than half of American companies continue to work in Russia. Among them are ICT business

On July 7, 2024, it became known that more than half of American companies, including representatives of ICT business, continue their activities in the Russian market after February 2022. This conclusion was made on the basis of an analysis of open data conducted by specialists.

According to RIA Novosti, out of 659 US companies previously present on the Russian market, 337 organizations retained their presence in one form or another. Among them, 159 companies continue to work unchanged, and 178 have adapted their activities to new conditions.

The information technology and telecommunications (ICT) sector demonstrates significant stability in the Russian market. Of the 143 American ICT companies operating in Russia until February 2022, 65 continue their activities. At the same time, 21 companies operate unchanged, and 44 have adapted their business models.

The industrial sector also shows a high level of maintaining the presence of American companies. Out of 129 industrial enterprises, 78 remain on the Russian market, including 52 companies operating in the same mode and 26 organizations that have made changes in their activities.

Among the companies continuing to operate in Russia, manufacturers of consumer goods such as Procter & Gamble, Colgate-Palmolive, Johnson & Johnson, PepsiCo, Mars and Coca-Cola stand out. Burger King, TGI Fridays and Papa John's retained their presence in the catering industry.

Despite the general trend towards maintaining a presence, 322 American companies, which is 49% of the total, have completely ceased operations in Russia or with Russian partners. Among them are 78 ICT companies, 51 industrial enterprises and 43 entertainment companies.^[1]

Most foreign companies continue to work in Russia

By May 2024, Western companies are abandoning their plans to leave Russia.

Remaining Companies - Red

Most remain in the country as "bureaucratic obstacles to exit increase and consumer activity recovers."

Foreign companies that left Russia lost $107 billion on this

Foreign business that left Russia lost $107 billion on this. This amount at the end of March 2024 was named by the Reuters news agency with reference to its own calculations made on the basis of company reports.

The loss included write-offs and lost profits. The updated data indicate an increase in losses by a third since the last calculation, which Reuters journalists conducted in August 2023. Then the figure was $80 billion. It announced the sale of assets owned by Shell, HSBC, Polymetal International, Yandex NV, totaling about $10 billion with a discount of up to 90%.

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Reuters estimates the Yale School of Management, according to which by the end of March 2024, about 1,000 foreign companies left the Russian market, and hundreds more continue to work on an exit. At the same time, hundreds of foreign companies maintained their presence, among them - Auchan and. Benetton Group Many foreign manufacturers of consumer goods are not going to curtail business in the Russian Federation, saying that ordinary Russian consumers need their products, Reuters notes.

According to Eun Messi, an analyst at the global risk consulting company S-RM, foreign companies, when leaving the Russian market, "will face further difficulties and will be forced to come to terms with large write-offs and losses" amid tougher sanctions and weakening military support for Ukraine by the West.

In February 2024, Deputy Prime Minister and Head of the Ministry of Industry and Trade Denis Manturov said that only a fifth of European companies officially left the Russian market. Most companies have options to buy back assets, he noted xfk. Of 350 large American companies, 66 (19%) left Russia. According to Manturov, this ratio suggests that the domestic market and its potential are of interest to Western business, including due to the cost of energy carriers.^[2]

2023

In Russia, the number of hotels managed by foreigners has decreased by a third since the beginning of 2022

In Russia, the number of hotels managed by foreigners has decreased by a third since the beginning of 2022 and amounts to 30 thousand units by April 2024. Such data are provided by Olga Shirokova, partner of NF Group. Read more here.

In Russia, over 2 years, there were 10 thousand fewer companies with foreign participation - 116 400

By the end of 2023, there were 116,400 companies with foreign participation in Russia against 185 thousand in 2017, when the indicator was the maximum and measured 185 thousand. This became known in January 2024.

As they write "" Sheets with reference to the review SPARK-Interfax"" based on the data of the Unified State Register of Legal Entities. despite the departure of Western companies from Russia, the pace of business reduction with the participation of non-residents slowed down. For 10 months of 2023, the number of such legal entities decreased by 3.4 thousand, for the entire 2022 - by 6.2 thousand, for 2021 - by 17.3 thousand. The publication notes that the number of companies with foreign participation in Russia has decreased by almost 10 thousand in two years.

By the end of 2023, there were 116,400 companies with foreign participation in Russia

Analysts attribute the net decrease in the total number of companies with foreign participation to the fact that the number of liquidated persons was more than new registrations. In 2023, 9.5 thousand legal entities were liquidated, and 6.1 thousand appeared. Basically, very small companies are closed, the study notes.

According to SPARK-Interfax, out of 23.5 thousand companies with foreign co-owners liquidated since March 2022, only 2 thousand legal entities had revenue of more than 50 million rubles.

According to the study, in 2023, the average monthly number of registrations of companies with non-residents increased by 11% compared to 2022. But their number is 9% lower than in 2021.

Among the new companies, the activity of co-founders from the CIS and China has grown. For 10 months of 2023, 1.5 thousand companies from the PRC were registered. Moreover, organizations from this country now account for a quarter of all new registrations.

The share of the CIS increased from 44% in 2021 to 59% in 2023. The main contribution to the increase was made by Belarus (the share increased from 23 to 32%), Kyrgyzstan (from 5 to 9%) and Kazakhstan (from 5 to 6%). Turkey accounted for 3% of new registrations, India - 2%.

Wholesale has become an attractive area for foreign business. Its share in two years increased from 25% to 31%. The number of non-residents who are engaged in retail sales has grown from 8% to 15%.^[3]

Foreign companies that left Russia lost $103 billion because of this

Foreign companies that left Russia lost $103 billion because of this. Such data in mid-December 2023 was published by The New York Times (NYT), citing the results of an analysis of financial statements.

According to the newspaper, analysts predicted that the departure of Western companies "will help strangle the Russian economy," but the Russian leadership "had other plans" and turned the boycott of foreign business into "good luck for the state." At the same time, a large number of foreign companies continue to work in Russia, not wanting to lose the billions that have been invested for decades, the publication says.

Foreign companies lost $103 billion due to leaving Russia

As an example of a deal in which the state intervened, NYT cites attempts by the Dutch brewing company Heineken to sell Russian assets. The publication, citing people close to the negotiations, claims that the Russian authorities refused to agree on a deal with the buyer of Heineken assets and handed them over to the Arnest perfume company.

These are good deals for us... You mowed down, you left. We picked up on the cheap. Thank you, "said Anton Pinsky, founder of Pinsky & Co holding, in a conversation with NYT, who, together with rapper Timati (real name Timur Yunusov), bought out the Russian business of the Starbucks coffee chain, and then the local assets of the Domino's pizza chain.

In August 2023, Reuters, citing its whistleblowers, reported that some companies were facing a demand for additional discounts when selling assets, and only after that they receive a "green light" from the government to sell their business. According to one of the interlocutors, the commission "unfolds" some transactions, explaining that the value estimate should be 20-30% lower.^[4]

Which foreign brands have entered the Russian market since the beginning of 2023. List

In the first nine months of 2023 - from January to September - 16 new foreign brands entered the Russian market. Such data from the consulting company NF Group (formerly Knight Frank) were released in early October 2023.

As RBC writes with reference to this study, the recorded figure became a record for the Russian Federation in four years. For comparison: 26 new foreign retail players appeared in Russia, after which the number of new foreign companies decreased annually. So, in 2020 there were 13 of them, in 2021 - 15, and in 2022 - only 11.

Most of the new foreign companies that came to Russia in 2023 are clothing and footwear brands, as well as home goods from Turkey. According to the NF Group, in 2023, nine such companies appeared in the country, which operate in the price segment "medium" and "above average." Three more players are from Belarus. Also, a sportswear seller from Australia, chains from Kyrgyzstan, South Korea and Estonia entered the Russian market.

Prior to that, mainly American and European networks entered the Russian market, the newspaper notes. For example, in 2020 - German Boss Woman, Swedish & Other Stories, Italian Ereda. In 2021 - French Dior Beauty, Spanish Zara Beauty, American Guess Activewear. Experts interviewed by RBC believe that more and more "second and third echelon" brands will appear in Russia, which are less noticeable on the world market against the background of "international giants."

According to Mikhail Burmistrov, CEO of INFOLine Analytics, Russian brands such as Lime, Henderson, Gloria Jeans, Ostin, Melon Fashion Group brands (Zarina, Befree, Love Republic and Sela) benefit from the departure of foreign players. These companies have already occupied top sites in shopping centers and continue to increase the number of stores, including in the regions, the expert noted.^[5]

Foreigners have registered 45,000 companies in Russia since the beginning of the year

From early January to mid-September 2023, foreigners registered about 45 thousand companies in Russia. Such data were provided by the general director of the MSPA Corporation, Leksander Isaevich.

If we look at the statistics of the register of SMEs, then traditionally from year to year 1% of newly created companies are foreign. These figures have not changed much: now there are about 45,000, last year [2022] there were 43,000, "Isaevich said in a conversation with Izvestia (an interview was published on September 12, 2023).

SME Corporation announced the opening by foreigners of about 45 thousand companies in the Russian Federation in 2023

According to him, the dynamics remain almost unchanged due to the trend towards cooperation of companies, especially within the framework of logistics and supplies of industrial equipment. According to him, micro- and small entrepreneurs, as well as small and medium-sized businesses with corporations, often strive for unification. Large business began to pay more attention to small market players after the departure of foreign brands from Russia, Isaevich noted.

He also added that the state has become more likely to cooperate with SMEs. He gave an example: in the eight months of 2023, large state-owned companies concluded more than 26,300 contracts with almost 10,000 small and medium-sized entrepreneurs in the Far East.

New companies are being created, we see the cooperation of companies, especially within the framework of logistics and supplies of industrial equipment. For example, combining micro and small entrepreneurs with each other or combining SMEs with big business. More and more companies are starting to cooperate. Large non-state players are more likely to pay attention to small businesses. It helps to replace components and solve other problems that appeared after the departure of foreign brands, - said the CEO of the SME Corporation.[6]

2022

An increase in the number of foreign companies controlled by Russians by 21% to 45.6 thousand.

At the end of 2022, the number of foreign companies controlled by Russian residents reached 45.6 thousand. This is 21% more than the result for the previous year. The corresponding indicators are reflected in the report of the Federal Tax Service (FTS), published in early April 2024.

According to RBC, referring to the data of the department, in 2022 the growth rate of the number of controlled foreign companies (CFCs) became a record since 2017, when the increase was 33%. For comparison: in 2021, the increase was recorded at the level of 8%, and in 2020 - 14%.

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The report of the Federal Tax Service says that at the end of 2022, more than 18.3 thousand taxpayers provided notifications of the presence of CFCs. Of these, approximately 82% were individuals, and the remaining 18% were Russian legal entities. Compared to the previous year, the number of CFC notifiers increased by 10%. It is noted that the vast majority of declared CFCs are foreign organizations - 98%. Foreign structures without the formation of a legal entity make up only 2%.

The increase in the number of declared CFCs in 2022 may be explained by several reasons. One of them, as noted by Evgeny Vlasov, head of tax practice at GSL Law & Consulting, is the desire of Russian business to take advantage of the benefits under the fourth capital amnesty, which took place from March 2022 to February 2023. At the same time, Oksana Rodionova, head of tax practice at the Business Fairway law firm, attributes the increase to an increase in fines for failure to fulfill duties to submit notifications about the CFC. Against this background, the tax authorities have become more active in bringing violators to justice. Improving tax administration and increasing transparency in the framework of international exchange of tax information also contribute to positive dynamics.^[7]

Rating of the largest foreign companies in Russia. Leroy Merlin comes first

The French retail chain of home goods Leroy Merlin with revenue of 529.7 billion rubles topped the rating of the largest foreign companies compiled in Forbes 2022. The results of the study were published in early October 2023.

The second place in the list was taken by JT Groupe from Japan, its revenue amounted to 432.6 billion rubles. In third place was the American Philip Morris International with revenue of 399.9 billion rubles. The five largest foreign companies also included PepsiCo with revenue of 303.7 billion rubles and Elo Groupe with revenue of 292.6 billion rubles.

The rating includes companies that, as of September 20, 2023, are more than 50% owned by foreign corporations or individuals. They are ranked by total revenue generated in 2022. The total amount of revenue included data from the main Russian divisions of a foreign company.

It is noted that about 22 companies dropped out of the rating due to the sale, suspension or closure of business in Russia, their place was taken by new market participants, including business from China, Turkey and even Belarus.

Companies from USA retained their leading position in the ranking, although their number for the year decreased from ten to eight. China increased its representation from one to six companies. The number of Turkish companies on the list for the year increased from one to five (the same number of participants in the list from Germany and), France Chinese - up to six. In total, companies from 18 countries are present in the ranking, including eight (a year the American ago there were participants from 17 countries, ten of them from the United States).

After the start of a special operation in Ukraine, the largest Western brands announced their withdrawal from the Russian market and the suspension of investments. More than 1,000 companies have publicly reported it, according to Yale.^[8]

Profit of the 100 largest foreign companies in Russia soared by 54%

The profit of the 100 largest representative offices of foreign companies in Russia in 2022 soared by 54% compared to 2021 and reached 1.1 trillion rubles. In total, taxes of 288 billion were paid (about 1% of the total taxes of the Russian budget). Most of all paid companies from France (55 billion rubles), Britain (47 billion rubles) and the United States (40 billion rubles). Such data in June 2023 led journalists "New Newspaper Europe" after studying financial reports.

The French oil and gas company TotalEnergies SE earned the most in 2022. Its net profit doubled and reached 269 billion rubles. The company justified the refusal to leave the Russian Federation by the fact that such a step "would enrich Russian investors, which contradicts the purpose of the sanctions."

The profit of the 100 largest foreign companies in Russia for the year soared by 54%

Another leader among the 100 foreign companies whose reporting was studied by Novaya - Europe was the Austrian Raiffeisen Bank, which increased its net profit by 2.7 times to 141 billion rubles. According to journalists, the bank earned against the background of disconnecting the largest Russian banks from the SWIFT international transfer system.

In the field of food, the most profitable was the American PepsiCo, which in 2022 tripled its net profit to 45 billion rubles, the study said. Also in the top ten were British Petroleum, Japan Tobacco, Mondelez, Mars, Mondi (Mondi), Kia and Knauf.

Companies that have increased profits the most will have to pay an "emergency tax" to the budget. It will be calculated from "superannuation" for 2021-2022 (according to the calculations of "New-Europe," about 700 billion rubles). This means that the amount of "emergency tax" for them will be from 33 to 67 billion rubles, depending on the payment period. In total, in this way, the Ministry of Finance plans to collect 300 billion rubles, the newspaper said.^[9]

Only 8.5% of companies from the EU and G7 left the Russian market during the conflict in Ukraine

Economists at the University of St. Gallen found that most of the companies headquartered in the EU and G7 countries continue to operate in Russia. Less than 9% of firms left the Russian market due to the situation in Ukraine. The results of the study were published in January 2023. Of those who remained in the country, 19.5% are companies from Germany, 12.4% are from the United States.

In 2022, only 8.5% of foreign companies left Russia

The departed companies in 2021 accounted for 6.5% of total pre-tax profit, 8.6% of movable property, 8.6% of assets and 10.4% of operating profit. Employment in them was higher than average - 15.3% of all workers were involved in companies of "unfriendly" countries in 2021.

The Russian Center for Strategic Studies cites slightly different figures (by the fall of 2022):

• 7% of companies declared complete departure without selling a business (for example, IKEA).
• 15% decided to leave through a transfer to a new owner (McDonald's, OBI).
• 34% remained, having given up new investment or advertising (Leroy Merlin, Red Bull ).

Transactions after the announcement of the departure from Russia were concluded either according to the model of sale to a new investor and assumed a complete withdrawal from the market, or according to the model of sale to a new investor with the preservation of a minority stake or the possibility of buyback. Also, assets were often sold to a local partner or managers.

According to the Speaker of the State Duma Vyacheslav Volodin, the authorities are interested in ensuring that the business functions smoothly. 75.9% of companies that continue to operate in Russia by January 2023 are satisfied with the business climate in the country. Domestic enterprises actively occupy the vacated niches: for example, the production of clothing in the Russian Federation increased by 42%, and medicines - by 15%.^[10]

Companies from which countries left or disguised in Russia

Most foreign companies during the conflict in Ukraine chose to stay in Russia or transfer assets to partners with the right to buy back in a few years.

Reduction of the number of companies with foreign participation by 70% in 7 years from 103 thousand to 26 thousand due to deoffshorization and hidden participation of foreigners

Analysts record a sharp reduction in international joint-stock ties of Russian business - from 2015 to July 2022, more than 70% of companies with foreign co-owners left Russia. According to SPARK-Interfax estimates, the number of such organizations in seven years decreased from 103.6 thousand to 26.7 thousand. For example, the number of companies with German roots fell by 68% - from 5.6 thousand to 1.8 thousand. As a percentage, the largest reduction is in low-tax jurisdictions - Panama and the British Virgin Islands (by 85%), Cyprus (four times).

The Russian market is actively leaving business from "friendly" countries - although companies from Asia were not active in creating enterprises in Russia, they were ahead of entrepreneurs from developed countries in terms of flight rates. Since 2015, the number of companies from the PRC has decreased by 79% (from 3.4 thousand to 0.7 thousand), from India - by 87% (from 339 to 43), from Turkey - by 81% (from 1.7 thousand to 0.3 thousand).

The outflow of foreign business from Russia takes place along two trajectories - this is the departure of foreign companies themselves and the regrouping of Russian business assets and their return from offshore jurisdictions. Deoffshorization, we recall, was accompanied by tougher legislation - in particular, the requirement to report on the income of controlled foreign companies and restrictions on the work of foreigners in a number of industries. In addition, the attractiveness of offshore companies was reduced by the revision of a number of agreements on the avoidance of double taxation (in particular, with Cyprus) or even their break (with the Netherlands).

Previously, the departure of "real" foreigners was of a point nature, but after the start of the Russian military operation in Ukraine, it became massive - by October, 317 global companies left the Russian market. The outflow rate of foreign companies has not yet changed compared to 2021, but at least several months pass between the announcement of the departure and the formal closure of a legal entity with foreign participation. "It will be possible to fully assess the consequences of the outcome of investors from Russia only next year," suggest SPARK-Interfax. At the same time, experts are optimistic about the prospects for Russian business on the international market, noting that ties with it are moving into other forms - agency relations, the development of mutual trade or the preservation of a foreign co-owner in Russia in a veiled or postponed form.

2021: The number of companies with foreign participation in the Russian Federation decreased by 40%, to 28.4 thousand.

By mid-September 2021, the number of companies with foreign participation in Russia decreased to 28.4 thousand from 47.1 thousand in August 2018. Thus, the decline was 40%, according to data from analysts at SKB Kontur (the company is developing online services for accounting and business).

The total number of legal entities during this time decreased by 22% - from 3.9 million to 3.03 million. This was largely due to the purge of the registry from "dead" organizations that do not pass tax records, notes Kommersant"."

Analysts explained that the decrease in the share of foreign participation in Russian business may be associated with the outflow of foreign capital from the country, as well as with a decrease in the number of parent companies registered on offshore.

The number of companies with foreign participation in Russia decreased to 28.4 thousand.

The head of the API project "Kontur. Focus" Elena Kataeva believes that this situation was affected by sanctions and the reduction of investment programs by large companies amid the COVID-19 coronavirus pandemic.

Geographically, most companies with foreign participation are located in Moscow and St. Petersburg. It is noteworthy that such 272 such companies are registered in the Republic of Crimea, despite the sanctions. The smallest share of such structures is noted in the national republics.

The share of companies with foreign participation in the Far East, where a special tax regime is in effect, has decreased less than in the country as a whole - by only 27%.

The offshore British Virgin Islands, Hong Kong and Seychelles account for fewer than 30 founders. As well as throughout the country, the share of founders from Belize has sharply decreased in the Far East.

Most of the Russian companies with foreign participation are engaged:

• provision of financial services (1258 out of 32.8 thousand);
• "head office activities and management consulting" (1147 out of 31.5 thousand);
• auto industry (196 - 7% of the number of employees in the industry).^[11]

2020: Reduction in the number of companies created by foreigners in Russia by 36%, to 1,443 firms - Kartoteka.ru

The number of companies created by foreigners in Russia in 2020 decreased by 36% compared to the previous one and amounted to 1,443. In 2018-2019, 2,931 and 2,247 such firms were registered, respectively.

These data are provided by RBC with reference to the service of information and analytical services in the business sector Kartoteka.ru. The representative of the company clarified to the publication that the statistics given are not exhaustive, since the Unified State Register of Legal Entities may not indicate the citizenship of a foreign founder - an individual.

According to Kartoteka.ru, in 2020, 214.6 thousand commercial organizations were created in Russia, and the share of firms with foreign founders is only 0.7%. At the same time, citizens of the United States, Germany and Great Britain in 2020 opened only 20 companies in Russia.

The number of companies created by foreigners in the Russian Federation in 2020 decreased by a third

The statistics were partly influenced by the COVID-19 pandemic. In 2020, Russia as a whole registered 24% fewer companies than in 2019. In addition, in 2020, Russia began to change the tax regime with a number of countries, which account for about half of investments in Russian business. Russia has already signed new agreements on the avoidance of double taxation with Cyprus, Luxembourg and Malta.

According to analysts, a significant part of formally foreign investments is in fact "circular," that is, a resident from Russia is behind a nominal foreign shareholder. Interest in such schemes among Russian entrepreneurs is decreasing, so the share of formally foreign business is also falling, says Sergey Nesterenko, director of business development at Hill Consulting. The main reason for the rejection of such schemes, he calls the inability to open an account for such a company in a "decent and even already indecent bank."

According to Kartoteka.ru 's calculations, the eight countries whose persons most often become founders of companies in Russia (Cyprus,, Seychelles,, Great Britain,, USA,) Germany Belarus Netherlands China accounted for 458 companies (32%) in 2020. The most significant number of established companies fell for the Seychelles (from 293 to 22 in three years) and the UK (from 214 to 62). The number of^[12]

Notes